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You may be familiar with the saying that “too much” of a good thing can be dangerous. This might be true about fine wine, but more is always better regarding passive income. That’s why so many passive income investors value offerings with the potential for double-digit returns. If you fall into this category, you might like this exchange-traded fund (ETF) from JP Morgan that’s paying a dividend of nearly 10%.
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Many investors see Nasdaq as the “younger, hipper” version of America’s major stock exchanges. This perception is rooted heavily in the belief that Nasdaq offerings offer opportunities for share growth, mainly because they cater more heavily to tech stocks and startups. The explosive growth potential of tech stocks like Nvidia is exciting, but if there is a knock on the top Nasdaq shares, they don’t necessarily pay high dividends.
According to the Slickcharts website and public filings, the NASDAQ-100, an index of the top 100 performing stocks on the Nasdaq exchange, is currently paying a dividend of only 0.08%. The JP Morgan Nasdaq Equity Premium Income ETF is designed to give investors the best of both worlds by combining Nasdaq growth potential with blue-chip dividend returns.
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This ETF achieves this through a unique strategy of trading stock options while holding shares in some of Nasdaq’s best stocks. The “hold” portion of the JP Morgan Nasdaq Equity ETF’s portfolio includes some of the NASDAQ-100’s best stocks, including Amazon, Apple and Nvidia. It’s also worth noting that this ETF prioritizes growth and performance with its “hold stocks.”
This ETF increases its shares in NASDAQ-100 stocks that perform strongly in each quarter while also lowering its exposure to underperforming stocks. Many other competing index funds tend to match the NASDAQ-100’s share allocation and then adjust on a yearly basis. That is not an unsound strategy, but it could lead to missed opportunities on overperforming stocks and prolonged exposure to underperforming stocks.
